AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 7, 1997
REGISTRATION NO. 333-33523
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CANMAX INC.
(Exact name of Registrant as specified in its charter)
WYOMING 75-2461665
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
150 WEST CARPENTER FREEWAY
IRVING, TEXAS 75039
(972) 541-1600
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
PHILIP M. PARSONS COPY TO:
EXECUTIVE VICE PRESIDENT WILLIAM L. RIVERS, ESQ.
AND CHIEF FINANCIAL OFFICER ARTER & HADDEN
CANMAX INC. 1717 MAIN STREET, SUITE 4100
150 WEST CARPENTER FREEWAY DALLAS, TEXAS 75201-4605
IRVING, TEXAS 75039 (214) 761-2100
(972) 541-1600
(Name, address, including zip code,
and telephone number, including
area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
863,364 SHARES
CANMAX INC.
COMMON STOCK
The 863,364 shares (the "Shares") of common stock, no par value per
share (the "Common Stock"), of Canmax Inc. ("Canmax") to which this
Prospectus relates are being offered on behalf of and for the account of a
certain stockholder (the "Selling Stockholder") of Canmax. Canmax
anticipates that the Shares will be offered for sale until the earlier of (i)
the sale of all of the Shares, or (ii) 180 days after the effectiveness of
this Registration Statement. Canmax has agreed to pay all expenses of
registration in connection with this offering, but will not receive any of
the proceeds from the sale of the Shares being offered hereby. All fees and
disbursements of counsel for the Selling Stockholder, and all brokerage
commissions and other similar expenses incurred by the Selling Stockholder
will be borne by the Selling Stockholder. The aggregate proceeds to the
Selling Stockholder from the sale of the Shares will be the purchase price of
the Shares sold, less the aggregate brokerage commissions and underwriters'
discounts, if any, and other expenses of issuance and distribution not borne
by Canmax. See "Use of Proceeds," "Plan of Distribution" and "Selling
Stockholder."
The Common Stock is included in the Nasdaq Stock Market's SmallCap
Market (the "Nasdaq SmallCap Market") under the symbol "CNMX." On November 4,
1997, the last reported sales price for the Common Stock was $ 1.50 per share.
This offering of the Shares is currently not being underwritten.
However, the Selling Stockholder, brokers, dealers or underwriters that
participate with the Selling Stockholder in the distribution of the Shares
may be deemed "underwriters," as that term is defined in the Securities Act
of 1933, as amended (the "Securities Act"), and any commissions received by
broker-dealers, agents or underwriters and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Although neither Canmax nor the Selling
Stockholder have entered into any arrangement or underwriting agreement with
any underwriter, broker-dealer or agent, the Shares being offered hereby,
when sales thereof are made, may be made in one or more transactions (which
may involve one or more block transactions) through customary brokerage
channels, either through brokers acting as brokers or agents for the sellers,
or through dealers or underwriters acting as principals who may resell the
Shares in the Nasdaq SmallCap Market or in privately negotiated sales, or
otherwise, or by a combination of such methods of offering. Each sale may be
made either at market prices prevailing at the time of the sale or at
negotiated prices.
If and to the extent required, the specific number of Shares to be sold,
the name of the Selling Stockholder, the purchase price, the public offering
price, the names of any such agents, dealers or underwriters and any
applicable commissions or discounts with respect to a particular offer will
be set forth in an accompanying Prospectus Supplement.
SEE "RISK FACTORS" BEGINNING ON PAGE 2 FOR A DISCUSSION OF CERTAIN
MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT
IN THE SHARES OF COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
NOVEMBER 10, 1997
AVAILABLE INFORMATION
Canmax is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information filed by Canmax with the Commission
may be inspected and copied at the Public Reference Section of the Commission
at Judiciary Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the following Regional Offices of the Commission: Chicago Regional
Office, Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and New York Regional Office, Seven World Trade
Center, New York, New York 10048. Copies of such materials also may be
obtained by mail at prescribed rates from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. In addition, such materials filed electronically by Canmax with the
Commission are available at the Commission's World Wide Web site at
http://www.sec.gov.
The Common Stock is listed on the Nasdaq SmallCap Market, and reports
and other information concerning Canmax may be inspected and copied at the
offices of the Nasdaq SmallCap Market at 1735 K Street, N.W., Washington,
D.C. 20006.
Canmax has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Shares of Common Stock
offered hereby. As permitted by the rules and regulations of the Commission,
this Prospectus omits certain information contained in the Registration
Statement. For further information with respect to Canmax and the Shares
offered hereby, reference is hereby made to the Registration Statement and
its exhibits and schedules. The Registration Statement may be inspected
without charge at the Public Reference Section of the Commission at Judiciary
Plaza, Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies
may be obtained therefrom at prescribed rates. Statements contained herein
concerning provisions of documents are necessarily summaries of such
documents, and each statement is qualified in its entirety by reference to
the copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Canmax with the Commission under the
Exchange Act are hereby incorporated by reference in this Prospectus: (i)
Canmax's Annual Report on Form 10-K for the fiscal year ended October 31,
1996, (ii) Canmax's Current Report on Form 8-K filed with the Commission on
May 5, 1997, (iii) Canmax's Quarterly Reports on Form 10-Q for the quarters
ended January 31, 1997, April 30, 1997 and July 31, 1997 and (iv) the
description of the Common Stock contained in Canmax's Registration Statement
on Form 10 filed with the Commission on January 6, 1994 and in any amendments
or reports filed for the purpose of updating such description.
All reports and other documents filed by Canmax with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of the offering of the
Shares made hereby shall be deemed to be incorporated by reference herein and
to be a part hereof from the date of filing of such reports and documents.
Any statement contained in a document incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus and
the Registration Statement of which it is a part to the extent that a
statement contained herein or in a subsequently filed document modifies or
supersedes such statement. Any statement so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus or the Registration Statement.
Upon written or oral request, Canmax will provide without charge to
each person to whom a copy of this Prospectus is delivered, a copy of any and
all of the documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by
reference into such documents). Requests should be directed to Canmax Inc.,
150 West Carpenter Freeway, Irving, Texas 75039, Attention: Philip M. Parsons
(972) 541-1600.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
With the exception of historical information, the matters discussed in
this Prospectus include forward looking statements that involve risks and
uncertainties. Among the risks and uncertainties to which Canmax is subject
are (i) user acceptance of Windows NT as an operating system, (ii)
concentration of revenues between two customers and Canmax's relationship
with such customers, (iii) the ability of Canmax to manage its growth, (iv)
Canmax's need for additional financing to fund product development, marketing
and related support services, (v) future technological developments and
product acceptance, (vi) intense price and product competition within the
industry, (vii) acquisition integration (iii) Canmax's ability to maintain
listing on the Nasdaq SmallCap Market and (ix) other risks indicated herein
and in filings with the Commission. As a result, the actual results realized
by Canmax could differ materially from the statements made herein. Recipients
of this Prospectus are cautioned not to place undue reliance on the forward
looking statements made in this Prospectus.
ii
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS OR IN THE DOCUMENTS
INCORPORATED BY REFERENCE.
THE COMPANY
Canmax Inc. ("Canmax") through its wholly owned subsidiary Canmax
Retail Systems, Inc. ("CRSI"), develops and provides enterprise wide
technology solutions to the convenience store and retail petroleum
industries. Canmax offers fully integrated retail automation solutions,
including "C-Serve," which includes point of sale ("POS") systems,
credit/debit network authorization systems, pump control systems, and other
back office management systems, and "Vista," its headquarters-based
management system. Canmax's products and services enable retailers and
operators to interact electronically with customers, capture data at the
point of sale, manage site operations and logistics and communicate
electronically with their sites, vendors and credit/debit networks. Canmax
also provides (a) software development, customization and enhancements, (b)
systems integration, installation and training services, and (c) 24 hour a
day, 365 day per year help desk services. These additional services enable
Canmax to tailor the solutions to each customer's specifications and provide
successful system implementation, installation, training and after sales
support.
Canmax's objective is to be a leading provider of enterprise wide
technology solutions to the convenience store and retail petroleum market.
Canmax is developing an enhanced version of its C-Serve product to run on the
Windows NT operating system in conjunction with a development project with
NCR Corporation ("NCR") and The Southland Corporation ("Southland"). As of
July 31, 1997, Canmax's products have been installed in over 5,900 locations
and Canmax has customers including Southland, ARCO and the Army and Air
Force Exchange.
Canmax was incorporated on July 10, 1986 in British Columbia, Canada,
and subsequently changed its name to "International Retail Systems Inc." On
August 7, 1992, Canmax renounced its original province of incorporation and
elected to continue its domicile under the laws of the State of Wyoming, and
on November 30, 1994 its name was changed to "Canmax Inc." Canmax's
principal executive offices are located at 150 West Carpenter Freeway,
Irving, Texas 75039 and its telephone number is (972) 541-1600.
THE OFFERING
Common Stock Offered by the Selling Stockholder... 863,364 shares
Percent of Outstanding Common Stock
Offered by the Selling Stockholder............. 13.1%(1)
Nasdaq SmallCap Market Symbol..................... CNMX
Use of Proceeds................................... Canmax will not receive any
of the proceeds from the
sale of the Shares being
offered hereby. The Selling
Stockholder will receive
all of the proceeds from the
sale of the Shares.
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(1) Percentage indicated is based upon 6,611,005 shares of Common Stock
outstanding as of October 31, 1997.
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RISK FACTORS
OTHER THAN HISTORICAL AND FACTUAL STATEMENTS, THE MATTERS AND ITEMS
DISCUSSED IN THIS PROSPECTUS ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. CANMAX'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. IN ADDITION TO
OTHER INFORMATION CONTAINED IN THIS PROSPECTUS, THE FOLLOWING FACTORS COULD
CONTRIBUTE TO SUCH DIFFERENCES. PROSPECTIVE INVESTORS SHOULD CAREFULLY
CONSIDER THE FOLLOWING FACTORS AND CAUTIONARY STATEMENTS IN DETERMINING
WHETHER TO PURCHASE SHARES OF COMMON STOCK IN THE OFFERING MADE HEREBY. ALL
FACTORS SHOULD BE CONSIDERED IN CONJUNCTION WITH THE OTHER INFORMATION AND
FINANCIAL DATA APPEARING ELSEWHERE IN THIS PROSPECTUS AND IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. SEE "SAFE HARBOR STATEMENT UNDER THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995."
CONCENTRATION OF REVENUES; CUSTOMER CONCENTRATION
Canmax's revenues are currently concentrated in The Southland
Corporation ("Southland"), which accounted for approximately 80% and 92% of
Canmax's total revenue for the nine month periods ended July 31, 1996 and
1997, respectively. Canmax's revenues derived from its relationship with
Southland include products and services provided directly by Canmax to
Southland and indirectly through NCR Corporation ("NCR") to Southland
pursuant to NCR's contract with Southland. For the fiscal years ended
October 31, 1994, 1995 and 1996, Southland accounted for approximately 50%,
73% and 86%, respectively, of Canmax's total revenues for such fiscal years.
During those same periods, Electronic Data Systems ("EDS") accounted for 38%,
10% and 7%, respectively, of Canmax's revenues for such fiscal years. No
other customer accounted for over 10% of Canmax's total revenues. On April
29, 1997, Canmax and EDS agreed to terminate substantially all of their
business arrangements. Canmax does not anticipate any significant future
revenues from EDS.
Because a significant portion of Canmax's revenues are derived from its
relationship with Southland, the timing of payments received from Southland
will affect the percentage of current assets of Canmax classified as either
cash (or cash equivalents) or accounts receivable; however, Canmax does not
anticipate any significant problems in collecting the accounts receivable
arising from the Southland relationship beyond any reserves established
therefor. If the financial condition of Southland adversely changes at a
time when the receivable owing from Southland is substantial and Southland
becomes unable to pay its debts as they become due, then the working capital
resources of Canmax may be adversely affected.
By the end of calendar 1997, Canmax will have completed its previously
announced $9.5 million project development contract with NCR/Southland, and
Canmax's help desk services and production support agreements with Southland
expire in December 1998. Canmax is in discussions with Southland regarding
future projects and services, but no definitive agreement has been reached to
date. No assurances can be made that Canmax will be able to negotiate a
contract with Southland on terms satisfactory to Canmax, if at all. Any
termination or significant disruption of Canmax's relationship with Southland
would have a material adverse effect on Canmax's business, financial
condition and results of operations. In addition, a deterioration in the
financial condition of any of its principal customers could expose Canmax to
the possibility of large accounts receivable write-offs, which would
materially adversely affect Canmax's financial condition and results of
operations. See " - License of Source Code."
LICENSE OF SOURCE CODE
On October 31, 1997, Canmax and Southland amended their master
agreement for software development and services, wherein Canmax agreed, among
other things, to license to Southland the right to use, possess, and modify
the source code for the software used by and developed for Southland. In
addition, the amendment clarified Southland's rights to engage third parties
to assist Southland in the development, testing and modification of the
Canmax software and to market the Canmax software to Southland's foreign
licensees. The license arrangement permits Southland to modify and develop
the Canmax software without the assistance of, or input from, Canmax.
Although Southland has committed to pay to Canmax at least $4.0 million
through December 7, 1998 for third-party hardware, software maintenance, help
desk, development and other services, Southland's use and possession of the
source code could result in a material reduction in Southland's reliance
upon, and payment of fees for services to, Canmax. Prior to Canmax's grant to
Southland of the source code license, Canmax, by virtue of its exclusive
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possession of the source code, was assured that any development services or
enhancements to the Canmax software would be provided by Canmax, thereby
assuring Canmax that it would continue to receive any software development
and support projects from Southland. The source code license will enable
Southland to support and develop the licensed software either internally or
with the assistance of third-party contractors other than Canmax. The use by
Southland of its own staff or third-parties other than Canmax to perform such
services could have a material adverse effect on Canmax. See "Risk Factors -
Concentration of Revenues; Customer Concentration" and "Recent Events -
Southland Amendment."
PRODUCT CONCENTRATION
Canmax's primary product is C-Serve, which was designed by Canmax
exclusively for the retail petroleum and convenience store marketplace to
provide POS transaction processing including a comprehensive range of
management tools. For the fiscal years ended October 31, 1994, 1995 and
1996, C-Serve accounted for approximately 55%, 57% and 34%, respectively, of
Canmax's revenues for such fiscal periods. Canmax has allocated significant
capital resources to the development and completion of an enhanced version of
C-Serve to run on the Microsoft Windows family of operating systems
("Windows"). Canmax anticipates that C-Serve and its related enhancements
and versions will continue to account for a substantial portion of Canmax's
revenue for the foreseeable future. Accordingly, to the extent that Canmax
experiences any decline in demand for these products and services as a result
of competition, product obsolescence or otherwise, Canmax's operating results
and business prospects could be adversely affected.
HISTORY OF LOSSES
From inception through the fiscal year ended October 31, 1995, Canmax
experienced losses from continuing operations of approximately $6,042,000 and
$3,734,000 for the fiscal years ended October 31, 1994 and 1995,
respectively. For the fiscal year ended October 31, 1996, Canmax reported its
first full year of net income of approximately $143,000. For the nine months
ended July 31, 1997, Canmax reported a net loss of approximately $811,000.
There can be no assurance that Canmax will continue to report net income in
the future as it pursues its plans to expand its product offerings and
customer base and to enhance the capabilities of its state-of-the art help
desk.
The development of Canmax's business and the expansion of its product
offerings and customer base will require significant expenditures. Certain
of these expenditures, including marketing, sales and general and
administrative costs, are expensed as incurred while other expenditures,
including software design costs, are expensed over a period of time. Canmax
will continue to incur significant expenditures with the growth of its
business, including capital costs associated with expanding Canmax's product
offerings and sales, marketing and other expenses associated with expanding
Canmax's customer base. In light of Canmax's history of losses and its
expectation that it will continue to incur significant expenses in the
foreseeable future, there can be no assurance that Canmax will be able to
implement its growth strategy, sustain profitability or generate sufficient
cash flow to service its growth expectations.
LIQUIDITY NEEDS; DILUTION
Canmax generally maintains liquidity through cash generated by
operations, the issuance of equity securities, and the exercise of stock
options. Canmax has no line of credit or other lending facility. Canmax
continues to utilize the majority of its development resources to complete
the NCR/Southland Windows NT based project currently in progress. Canmax is
also developing its next generation Windows-based product to market to
potential customers other than Southland, the completion of which will not be
funded by work currently being performed for Southland. Canmax estimates
that the costs necessary to complete the development of this product and
bring the new product to market will range from $1.5 million to $2.0 million.
The failure to complete the development of such product could materially and
adversely affect the business prospects of Canmax.
Canmax believes that it may be necessary to raise additional capital to
complete development of its next generation products within the critical
window of opportunity and to provide vital marketing and other support
services. If cash generated from operations is insufficient to satisfy
Canmax's liquidity requirements, Canmax may
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be required to sell additional debt or equity securities or obtain lines of
credit, delay new product development or restructure operations to reduce
costs. No financing arrangements to support this development project have
been entered into by Canmax at this time and there can be no assurances that
such arrangements will be available in the future, or, if available, that
such arrangements will be on terms satisfactory to Canmax.
Canmax is reviewing an acquisition strategy within its current industry
and other vertical markets. From time to time Canmax will review acquisition
candidates with products, technologies or other services that could enhance
Canmax's product offerings or services. Any material acquisitions could
result in Canmax issuing or selling additional debt or equity securities,
obtaining additional debt or other lines of credit. These activities may also
result in a decrease in Canmax's working capital depending, on the amount,
timing and nature of the consideration to be paid.
SIGNIFICANT FLUCTUATIONS IN REVENUES AND OPERATING RESULTS
Canmax's quarterly and annual revenues and operating results have
varied significantly in the past and are likely to continue to do so in the
future. Revenues and operating results may fluctuate as a result of several
factors, including the demand for Canmax's products and services, the timing
and acceptance of the introduction of new hardware and software products,
competitive conditions and economic conditions. In particular, Canmax's
operating results are highly sensitive to changes in the mix of Canmax's
product and service revenues and product margins. Further, the purchase of
Canmax's products and services generally involves a significant commitment of
capital, with the attendant delays frequently associated with large capital
expenditures and authorization procedures within an organization. For these
and other reasons, Canmax's operating results are subject to a number of
significant risks over which Canmax has little or no control, including
customers' technology needs, budgetary constraints and internal authorization
reviews. Canmax may be unable to adjust spending sufficiently in a timely
manner to compensate for any unexpected revenue shortfall, which could
adversely affect operating results. Accordingly, Canmax believes that
period-to-period comparisons of its operating results should not be relied
upon as an indication of future performance. In addition, the results of any
quarterly period are not necessarily indicative of results to be expected for
a full fiscal year. It is possible that in certain future periods, Canmax's
operating results may be below the expectations of public market analysts and
investors. In such event, the price of Canmax's Common Stock would likely be
materially adversely affected.
NEED FOR ADDITIONAL FINANCING FOR GROWTH
The growth of Canmax's business will require substantial investment on
a continuing basis to finance capital expenditures and expenses related to
product development and customer base growth. However, although the majority
of Canmax's new product development expenses are currently funded through
revenues derived under agreements with NCR and Southland, Canmax anticipates
that it will require an additional $1.5 to $2.0 million to develop and bring
its next generation Windows-based product to market. Canmax has historically
utilized capital leases to fund its larger capital expenditures, and cash
flow from operations and trade credit for its working capital requirements.
There can be no assurance that any such required additional funds would be
available on satisfactory terms and conditions, if at all. The markets for
Canmax's product and service offerings are characterized by rapidly changing
technology and frequent new product and service offerings. As a result,
Canmax's success will depend on its ability to enhance existing products and
services and to develop and introduce, on a timely and cost-effective basis,
new products and services that keep pace with technological developments and
address increasingly sophisticated customer requirements. This continued
product development may utilize capital currently expected to be available
for Canmax's present operations. The amount and timing of Canmax's future
capital requirements, if any, will depend upon a number of factors, including
product development expenses, marketing support service expenses, and
competitive conditions, many of which are not within Canmax's control.
Failure to obtain any required additional financing could materially
adversely affect the growth, cash flow and earnings of Canmax.
INCREASED LISTING STANDARDS; APPLICATION OF PENNY STOCK RULES
On January 28, 1997, the National Association of Securities Dealers,
Inc. and The Nasdaq Stock Market approved increases in the listing and
maintenance standards governing the Nasdaq SmallCap Market. The Commission
approved the changes on August 22, 1997. The new standards were declared
effective by the Nasdaq
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SmallCap Market on August 25, 1997. These new standards require, as a
condition to continued listing on the Nasdaq SmallCap Market, an issuer
maintain either "net tangible assets" (defined as total assets, excluding
goodwill, minus total liabilities) of $2.0 million, market capitalization of
$35.0 million or net income in two of the last three fiscal years of $0.5
million. Companies failing to satisfy the new requirements are allowed a six
month "compliance" period during which they may take appropriate steps to
comply with the new requirements. As of July 31, 1997, Canmax had net
tangible assets of approximately $1.3 million and a market capitalization of
approximately $15.7 million. Accordingly, Canmax does not currently meet the
requirements for continued listing on the Nasdaq SmallCap Market. If Canmax
continues to fail to satisfy the requirements for continued listing on the
Nasdaq SmallCap Market, Canmax will be subject to being delisted from the
Nasdaq SmallCap Market. The delisting of Canmax would likely materially
adversely affect the liquidity of the Canmax Common Stock and the operations
of Canmax.
In addition, Canmax's Common Stock is subject to the so called "penny
stock" rules that impose additional sales practice requirements on
broker-dealers who sell such securities to persons other than established
customers and accredited investors (generally defined as an investor with a
net worth in excess of $1,000,000 or annual income exceeding $200,000 or
$300,000 together with a spouse.) For transactions covered by the penny stock
rules, a broker-dealer must make a special suitability determination for the
purchaser and must have received the purchaser's written consent to the
transaction prior to sale. Consequently, both the ability of a broker-dealer
to sell the Common Stock and the ability of holders of Common Stock to sell
their securities in the secondary market, including the Nasdaq SmallCap
Market, may be adversely affected.
The Commission has adopted regulations that define a "penny stock" to
be an equity security that has a market price (as defined in the regulations)
of less than $5.00 per share or an exercise price of less than $5.00 per
share, subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the
transaction, of a disclosure schedule relating to the penny stock market. The
broker-dealer must disclose the commissions payable to both the broker-dealer
and the registered representative, current quotations for the securities and,
if the broker-dealer is to sell the securities as a market-maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed
control over the market. Finally, monthly statements must be sent disclosing
recent price information for the penny stock held in the account and
information on the limited market in penny stocks. As a result of the
additional suitability requirements and disclosure requirements imposed by
the "penny stock" rules, an investor may find it more difficult to dispose of
the Common Stock.
RISKS ASSOCIATED WITH RAPID TECHNOLOGICAL CHANGE
The markets for Canmax's product and service offerings are
characterized by rapidly changing technology and frequent new product and
service offerings. The introduction of new technologies can render existing
products and services obsolete and unmarketable. Canmax's primary software
product is C-Serve which runs under MS-DOS and UNIX operating systems. With
the emerging growth of the Windows family of operating systems, customers are
preferring that their systems, solutions and software run under a
Windows-based system. As a result, Canmax believes it is critical that it
develop a Windows based product to remain competitive in today's changing
marketplace. Further, Canmax's continued success will depend on its ability
to enhance existing products and services, to develop and introduce, on a
timely and cost-effective basis, new products and services that keep pace
with technological developments, and to address increasingly sophisticated
customer requirements. There can be no assurance that Canmax will be
successful in identifying, developing and marketing product and service
enhancements or new products and services that respond to technological
change, that Canmax will not experience difficulties that could delay or
prevent the successful development, introduction and marketing of product and
service enhancements or new products and services, or that its product and
service enhancements and new products and services will adequately meet the
requirements of the marketplace and achieve market acceptance. Canmax's
business, financial condition and results of operations could be materially
adversely affected if Canmax were to incur delays in sourcing and developing
product and service enhancements or new products and services or if such
product and service enhancements or new products and services did not gain
market acceptance.
-5-
DEPENDENCE ON AND NEED TO RECRUIT AND RETAIN KEY MANAGEMENT AND TECHNICAL
PERSONNEL
Canmax's success depends to a significant extent on its ability to
attract and retain key personnel. In particular, Canmax is dependent on its
senior management and technical personnel. As of July 31, 1997, Canmax
employed approximately 43 technical professionals. Canmax anticipates
further growth in its technical staff. In the past, Canmax has experienced
difficulty in attracting qualified technical personnel. Competition for such
technical personnel is intense and no assurance can be given that Canmax will
be able to recruit and retain such personnel. The failure to recruit and to
retain management and technical personnel could have a material adverse
effect on Canmax's anticipated growth, revenues and results of operations.
INTENSE COMPETITION
The markets in which Canmax operates are characterized by intense
competition from several types of technical service providers, including POS
equipment manufactures, specialized application software companies and pump
manufacturers. Canmax expects to face further competition from new market
entrants and possible alliances between competitors in the future. Certain of
Canmax's current and potential competitors have greater financial, technical,
marketing and other resources than Canmax. As a result, they may be able to
respond more quickly to new or emerging technologies and changes in customer
requirements or to devote greater resources to the development, promotion and
sale of their products and services than Canmax. No assurance can be given
that Canmax will be able to compete successfully against current and future
competitors.
PROTECTION OF INTELLECTUAL PROPERTY
Canmax seeks to protect its proprietary software, systems and processes
through copyright, trademark and trade secret laws and contractual
restrictions on disclosure and copying. Despite such measures, it may be
possible for unauthorized third parties to copy aspects of Canmax's software,
systems and processes or to obtain and use information that Canmax regards as
proprietary. In addition, no assurance can be given that the protective
measures taken by Canmax will be sufficient to preclude competitors from
developing competing or similar proprietary software, systems and processes.
See " - License of Source Code."
ABSENCE OF DIVIDENDS
Canmax has never declared or paid any cash dividends on its Common Stock
and does not presently intend to pay cash dividends on the Canmax Common
Stock in the foreseeable future. Canmax intends to retain future earnings
for reinvestment in its business.
MARKET FOR COMMON STOCK; VOLATILITY OF STOCK PRICE
Canmax cannot ensure that an active trading market for the Common Stock
on the Nasdaq SmallCap Market will be sustained. See "--Increased Listing
Standards; Application of Penny Stock Rules." However, even if a trading
market for the Common Stock continues, the price at which shares of Common
Stock trade is likely to be subject to significant volatility. The market
for the Common Stock may be influenced by many factors, including the depth
and liquidity of the market for the Canmax Common Stock, investor perceptions
of Canmax and general economic and other similar conditions. The market price
for shares of the Canmax Common Stock has varied significantly and may be
volatile depending on news announcements or changes in general market
conditions. In particular, news announcements, quarterly results of
operations, competitive developments, litigation or governmental regulatory
action impacting Canmax or Canmax's significant customer Southland may
adversely affect the Canmax Common Stock price.
-6-
THE COMPANY
OTHER THAN HISTORICAL AND FACTUAL STATEMENTS, THE MATTERS AND ITEMS
DISCUSSED HEREIN ARE FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS OF CANMAX MAY DIFFER MATERIALLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. CERTAIN FACTORS THAT
COULD CONTRIBUTE TO SUCH DIFFERENCES ARE DISCUSSED IN "RISK FACTORS," WITH
THE FORWARD-LOOKING STATEMENTS THROUGHOUT THIS PROSPECTUS AND IN "SAFE HARBOR
STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995."
BUSINESS
GENERAL. Canmax through its wholly owned subsidiary CRSI, develops and
provides enterprise wide technology solutions to the convenience store and
retail petroleum industries. Canmax offers fully integrated retail automation
solutions, including "C-Serve," which includes point of sale ("POS") systems,
credit/debit network authorization systems, pump control systems, and other
back office management systems, and "Vista," its headquarters-based
management system. Canmax's products and services enable retailers and
operators to interact electronically with customers, capture data at the
point of sale, manage site operations and logistics and communicate
electronically with their sites, vendors and credit/debit networks. Canmax
also provides (a) software development, customization and enhancements, (b)
systems integration, installation and training services, and (c) 24 hour a
day, 365 day per year help desk services. These additional services enable
Canmax to tailor the solutions to each customer's specifications and provide
successful system implementation, installation, training and after sales
support.
Canmax's objective is to become a leading provider of enterprise wide
technology solutions to the convenience store and retail petroleum market.
Canmax is developing an enhanced version of its C-Serve product to run on the
Windows NT operating system in conjunction with a development project with
NCR and Southland scheduled for release in the fourth calendar quarter of
1997. As of July 31, 1997 Canmax's products have been installed in over 5,900
locations and its customers include, among others, Southland, ARCO and the
Army and Air Force Exchange.
BUSINESS STRATEGY. In the United States, there are currently
approximately 200,000 locations which derive revenues from the operations of
convenience stores and/or retail gasoline sites. Canmax believes that the
industry is currently under automated and under invested in automation and
technology solutions. The National Association of Convenience Stores (NACS)
1995 Future Study: Convenience 2000 confirms that the convenience store
environment requires information derived from automation solutions to compete
efficiently and effectively. Convenience stores lag the rest of the retail
industry in store automation. For example, approximately 16% of all
convenience stores utilize scanning technology, while grocery stores have
implemented scanning technology in approximately 90% of their locations.
Recent studies indicated that convenience store operators recognize the
significance of automation of their operations to their future success.
Canmax believes that the industry is prepared to increase its investment in
automation and technology solutions. This belief is supported by recent
surveys which reveal that the majority of convenience store operators plan to
increase their spending for technology solutions. Canmax therefore believes
that there will be demand in the marketplace for the Canmax's products,
solutions and services. Canmax believes that international markets also
represent substantial marketing opportunities for its solutions.
Canmax's marketing strategy includes: (i) providing solutions based
products and services for the automation and management of convenience stores
and gasoline stations, (ii) maintaining a high level of customer service
through its help desk services and account managers, (iii) seeking strategic
partnerships to provide Canmax visibility to buying audiences worldwide, and
(iv) continuing to invest in product development initiatives.
Canmax identifies potential customers by size and geographic location
and directs its marketing efforts along these segments. In general, Canmax
allocates its sales and marketing efforts to "corporate accounts" with global
operations, "national accounts" with operations primarily in the U.S. and
"regional accounts" with operations on a local or regional basis. Canmax
estimates that corporate accounts represent approximately 20% of its target
locations, national accounts represent 60% of its target locations, and
regional accounts represent the remaining
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20% of its target locations. Canmax utilizes concurrent efforts by both sales
representatives and account managers in analyzing, selecting and implementing
an automation system.
PRODUCTS AND SERVICES
Canmax utilizes a process called "Pathmation" to analyze a customer's
needs, assess a customer's options, and implement the best resources
available to build a path leading a customer to its ultimate goal. The
Pathmation process includes: (i) defining business goals, (ii) defining
business processes to support the business goals; (iii) determining
technology requirements to support defined business processes; (iv)
developing an implementation plan that encompasses business processes,
technology training and continuing support; (v) deploying modified business
processes, technology and support infrastructure; and (vi) continuously
validating results with business goals and changes in business practices.
In December of 1993, Canmax signed a five year agreement with Southland
to provide software licenses, development services, and provide hardware and
help desk services. Southland chose Canmax's proprietary convenience store
automation software, C-Serve, as the basis for its automation of store
functions and operations at its corporate and franchise operated 7-Eleven
convenience stores in the United States. Software licensing, product and
service revenue under this agreement during the fiscal years ended October
31, 1994, 1995, and 1996 totaled approximately $2,118,000, $3,733,000 and
$2,581,000, respectively, while development revenues recorded under the
Southland agreement during these same periods totaled approximately
$2,468,000, $1,792,000 and $971,000, respectively. In 1995, Canmax contracted
with NCR to successfully bid for two additional contracts with Southland.
These projects resulted in revenues to Canmax of approximately $1,005,000 and
$1,755,000 in the fiscal years ended October 31, 1995 and 1996, respectively.
During fiscal 1996, Canmax reached an agreement with NCR to develop for
Southland a next generation Windows NT based version of the Canmax C-Serve
convenience store software for $9.5 million. NCR was chosen by Southland to
provide project management and other professional services for the project.
Approximately $3,920,000 of revenues under such agreement was recognized by
Canmax in fiscal 1996, and the remainder is expected to be recognized in
fiscal 1997. There are currently over 5,000 7-Eleven stores using software
developed by Canmax. See "Risk Factors - Concentration of Revenues; Customer
Concentration" and "Risk Factors - License of Source Code."
C-SERVE. The Canmax C-Serve is a comprehensive site-based store
automation software solution that provides, as its key features, debit/credit
card processing, pump control, POS and scanning capabilities, and significant
back office functions. Canmax's solutions are designed to allow retailers to
process transactions, manage pumps and credit/debit card processing and
capture data at the point of sale, as well as manage other front office and
back office operations. The key purpose of such systems is to provide the
store operator with information and tools to enable improved store operations
and profitability. C-Serve includes features such as touch screen, PC
keyboard or integrated third party POS terminals providing user friendly
applications and flexibility in set up and configuration to accommodate the
operational needs and differences of each site. Further, C-Serve has the
capability of supporting communications and data transfer to and from remote
corporate headquarters.
C-Serve was designed exclusively for the retail petroleum and
convenience store marketplace. C-Serve's features include:
- POS transaction processing, incorporating touch screens, PC POS
keyboards, or integrated POS terminals,
- fueling transactions,
- dispenser controls,
- settlement transactions for credit/debit cards,
- shift and day reporting,
- store maintenance,
- file maintenance,
- inventory controls,
- fuel inventory management,
- reporting capabilities,
- accounts receivable controls,
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- island payment terminals,
- credit/debit card authorizations,
- communications to or from head office,
- security controls,
- shelf label generation,
- interface to handheld terminals and scanners,
- time and attendance records, and
- car wash interface.
Presently, C-Serve operates in a DOS/UNIX environment. Canmax is
currently developing its next generation of C-Serve software to run under the
Windows NT operating system. The next generation product is being developed
concurrently with the development project with NCR/Southland and is expected
to reflect state of the art technologies, features and functionality. Release
of this product is scheduled for the fourth calendar quarter of 1997. See
"Risk Factors - Liquidity Needs; Dilution."
VISTA. The Canmax " Vista" software provides a flexible automation
system that is able to conform to changing business needs. Vista is a
decision support, communications and remote store management system that
operates from corporate headquarters. Through a communications network,
Vista provides for the transmission of data messages from headquarters to the
remote store and from the store to headquarters. Vista's features include
fuel and retail pricebook maintenance, tax book maintenance, vendor
pricebook maintenance, and exception reporting for stores. Other features
of Vista include:
-batch or on-line communications
-remote on-line support
-sales analysis from store to store, zone to zone and region to region
-addition of new parameters at any time
-decision support, and
-report writer
OTHER SERVICES AND PRODUCTS. In addition to revenues generated from the
licensing of C-Serve and Vista software and sale of proprietary communication
boards, revenues are generated from the following other services:
1) modification and custom development contracts,
2) installation and training services,
3) annual maintenance and support services contracts, and
4) the provision of third-party software and hardware.
Canmax's products are designed to provide a flexible generic system that
can be easily modified to meet most customer's individual needs and
preferences. Most customers, most customers, such as major oil companies,
typically require a certain degree of product customization and the
development of unique interfaces to communicate with their existing
proprietary networks and host systems. Canmax typically charges for
customization and development costs. Because Canmax retains ownership of the
source code for such products (which is essential to effect program changes),
Canmax typically realizes service revenues from such products throughout the
duration of a relationship with the customer.
To assist retailers and store operators in optimizing their use of
Canmax's software, Canmax also offers consulting, installation, training and
help desk support services. Canmax provides installation and training
services at each installed site, and back-up and technical support services
from a central location. Canmax has developed a proprietary help desk support
system known as "Sites." Sites provides efficient call handling, automatic
problem escalation, and customer reporting 24 hours a day, 7 days a week.
Trained support technicians handle everything from "how do I..." questions to
dispatching field service for hardware problems. Support services also
include free software and user guide updates as well as ensuring that
technicians respond to all problems in a timely manner. Sites management
reports help identify and resolve recurring issues, such as the need for
additional training at the store or potential hardware failures. Sites also
supports remote dial in capability to the Canmax help desk Sites
-9-
database, which provides customers managing a number of locations access to
data and reporting functions to better manage their operations.
Canmax does not usually directly sell hardware, such as personal
computers and POS terminals, although it does provide a small amount of
related equipment which may not be readily available from the principal
hardware vendor. The majority of hardware products supplied to customers is
provided by hardware vendors such as NCR, Ultimate Technologies and Compaq
Computers. Third party software and hardware products such as operating
systems, local and wide area network software and modems are also packaged
with Canmax's software and firmware products and sold in accordance with
distribution agreements entered into with such suppliers.
PRODUCT DEVELOPMENT. Due to the rapid pace of technological change in
its industry, Canmax believes that its future success will depend, in part,
on its ability to enhance and develop its software products to meet customer
needs.
C-Serve is being enhanced to be operating system independent through the
use of sophisticated software tools. Canmax believes that this independence
will be a competitive advantage. Canmax currently provides C-Serve in a Unix
environment and a Windows NT based version of C-Serve is scheduled for
release in fourth calendar quarter of 1997. Canmax has developed Vista
(commonly referred to as a "host system") which enables operators of chains
of gas stations/convenience stores to monitor and control activities at
stores. Operators are able to obtain "real time" store level information
(from all stores or any number of selected stores) at headquarters over
communications lines to provide timely information for decision making. See
"Risk Factors - Liquidity Needs; Dilution."
During the fiscal years ended October 31, 1994, 1995 and 1996, Canmax
expensed approximately $2,609,000, $2,401,000 and $1,477,000, respectively,
on product development activities. Canmax incurred approximately $3,127,000,
$0 and $129,000 during the fiscal years ended October 31, 1994, 1995 and
1996, respectively, in software development costs, which were initially
capitalized. Because of the uncertainty of future revenue in the near term
from certain products, Canmax recorded a write down of approximately
$4,127,000 of capitalized software costs in fiscal 1994.
SALES AND MARKETING. Canmax markets C-Serve and ancillary products and
services from its offices in Irving, Texas. Virtually all sales efforts are
focused on the U.S., Canada and Mexico at this time. However, Canmax plans to
expand its international marketing efforts in the future. More than 99% of
1996 revenue was derived from U.S. based customers.
BACKLOG. Product is generally delivered to customers when ordered.
There is no backlog of orders; however Canmax has signed contracts with
customers for the future delivery of products and services. Revenue from
these contracts may be affected by changes in customer requirements,
competition, technology and economic factors. There can be no assurance that
the Canmax's expectation of revenue will be realized in full.
COMPETITION
Canmax believes its competition can be categorized as follows:
- pump manufacturers,
- POS equipment manufacturers, and
- specialized application software companies.
Pump manufacturers supply the majority of point-of-sale devices used by
gas stations and convenience stores. They supply specialized equipment with
proprietary interfaces specific to their pump control consoles. The
proprietary nature of their products limits the technology used and the
ability to interface to other devices. Their primary intent, however, is to
provide a complementary service to the sale of their "core" product -pumps.
Canmax faces competition from manufacturers such as Dresser Industries Inc.,
Gilbarco Inc. and Tokheim Corporation.
-10-
Software firms, such as Canmax, specializing in gas and convenience
store applications enjoy the advantage of bringing specialized knowledge and
applications to customers. The industry, however, does not enjoy a strong
reputation as service consultants who deliver solutions that meet/exceed
customer expectations. Canmax faces competition from software firms such as
Radiant Systems, Inc., MSI, Pinnacle, Inc., and Stores Automated Software,
Inc. Canmax's service strategy is designed to employ "Pathmation," a
consultative servicing process, to understand customer needs, while guiding
and delivering appropriate products better than other marketplace
alternatives.
Specialized POS manufacturers traditionally have developed solutions
based on their proprietary hardware. POS manufacturers, such as Verifone,
Ltd., NCR and IBM, also compete with Canmax.
Many of Canmax's current and prospective competitors have substantially
greater financial, technical and marketing resources than Canmax. The most
significant threat is the possibility of some consolidation or alliance of
major suppliers creating a larger, stronger presence in the marketplace.
Canmax also anticipates that additional competitors may enter certain of
Canmax's markets, resulting in even greater competition. There can be no
assurance that Canmax will be able to compete with existing or new
competitors. Increased competition could result in significant price
reductions with negative effects upon Canmax's gross margins and a loss of
market share, which could materially and adversely affect Canmax's business,
financial condition and operating results.
RECENT EVENTS
EDS OPTION EXERCISE
On April 29, 1997, EDS exercised an option to acquire 25% of Canmax's
Common Stock, resulting in Canmax issuing to EDS an additional 1,598,136
shares of Canmax Common Stock. Canmax accounted for this transaction by
reclassifying the amount associated with the option to common stock. EDS
then immediately sold its total interest in Canmax, representing 1,863,364
shares, in a private transaction to Founders Equity Group, Inc. ("the Selling
Stockholder") and the Dodge Jones Foundation, two Texas-based institutional
investors. In conjunction with this transaction, Canmax agreed to extend
certain registration rights similar to those held by EDS with regard to such
shares to the two institutional investors. See "Selling Stockholder" and
"Plan of Distribution."
Canmax believes that the termination of its relationship with EDS is
beneficial because Canmax will be able to market its products directly
(rather than through EDS) to a larger customer base within selected target
markets. Additionally, Canmax believes that the exercise of the EDS option
will facilitate Canmax's future growth strategies as the dilutive effect of
the EDS option has been eliminated.
WARRANT ISSUANCE
On May 9, 1997, the Selling Stockholder exercised its right to demand
that Canmax file a registration statement with regard to all its shares of
Canmax Common Stock. Under applicable securities laws, Canmax was unable to
file such registration statement until after the filing of the registration
statement relating to the sale of shares of Canmax Common Stock in the
proposed merger with Auto-Gas Systems, Inc. See "- The Proposed Auto-Gas
Merger." Pursuant to the terms of the registration rights agreement with the
Selling Stockholder, Canmax was to have filed a registration statement on or
about July 23, 1997 or incur a registration penalty of 50,000 shares per
month. The Selling Stockholder agreed to extend the registration obligation
in exchange for a warrant to purchase 50,000 shares of Canmax Common Stock at
an exercise price of $2.00 per share. The registration obligation has been
satisfied by the filing of the registration statement of which this
Prospectus forms a part.
THE PROPOSED AUTO-GAS MERGER
Canmax entered into an Amended and Restated Agreement and Plan of Merger
(the "Merger Agreement") dated as of June 16, 1997 among Canmax, CRSI and
Auto-Gas Systems, Inc. ("AGSI") pursuant to which AGSI was to have been
merged (the "Merger") with and into CRSI. By the mutual agreement of Canmax
and AGSI, the Merger Agreement and Merger were terminated on October 10, 1997.
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In May 1997, Canmax retained the Selling Stockholder to provide
investment advisory services to Canmax regarding the Merger with AGSI.
Pursuant to the terms of such agreement, Canmax has agreed to pay to the
Selling Stockholder a fee of $25,000.
SOUTHLAND AMENDMENT
On October 31, 1997, Canmax and Southland entered into Amendment No. 3
to the Master Agreement for Computer Software Development, License and
Maintenance (the "Southland Amendment"). Pursuant to the terms of the
Southland Amendment, Southland agreed to pay to Canmax a one-time license fee
of $1.0 million for the license to use, possess and modify the source code
for the software developed by Canmax for Southland or otherwise used by
Southland. $500,000 of the license fee is payable within 5 days following
the execution of the Southland Amendment, and the remainder of the license
fee is payable within 5 days following the completion of the parties'
reconciliation of the source code and object code for such software. The
Southland Amendment also clarifies the right of Southland to market and
distribute the licensed software to foreign licensees of Southland and the
right of Southland to use the services of third parties other than Canmax to
modify, test and develop the licensed software. The Southland Amendment also
contains Southland's agreement to pay to Canmax on or before December 7,
1998, no less than $4.0 million for purchases of hardware and for software
maintenance, help desk, development and other services. In addition, the
Southland Amendment deletes Southland's right to terminate the agreement
without cause. See "Risk Factors - License of Source Code."
USE OF PROCEEDS
The Shares being offered hereby are for the account of the Selling
Stockholder. Accordingly, Canmax will not receive any of the proceeds from
the sale of the Shares by the Selling Stockholder. See "Selling Stockholder."
-12-
SELLING STOCKHOLDER
The following table sets forth the name of the Selling Stockholder and
the number of shares that may be offered by it. The number of Shares that may
be actually sold by the Selling Stockholder will be determined by the Selling
Stockholder, and may depend upon a number of factors, including, among other
things, the market price of the Common Stock. Because the Selling
Stockholder may offer all, some or none of the Shares that it holds, and
because the offering contemplated by this Prospectus is currently not being
underwritten, no estimate can be given as to the number of Shares that will
be held by the Selling Stockholder upon or prior to termination of this
offering. See "Plan of Distribution." The table below sets forth information
as of October 31, 1997, concerning the beneficial ownership of the Shares of
the Selling Stockholder. All information as to beneficial ownership has been
furnished by the Selling Stockholder.
SHARES OF
COMMON STOCK
SHARES OF COMMON STOCK OFFERED IN SHARES OF COMMON STOCK
OWNED BEFORE OFFERING THE OFFERING OWNED AFTER OFFERING(1)
---------------------- ------------ -----------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT NUMBER NUMBER PERCENT
- --------------------------- --------- --------- ------------ ---------- ----------
Founders Equity Group, Inc. 913,364(2) 13.7% 863,364(3) 50,000(2) *
- ---------------
* Less than one percent (1%)
(1) Assumes all shares of Common Stock offered hereby are sold.
(2) Includes 50,000 shares subject to presently exercisable warrants. Canmax
has agreed to grant to the Selling Stockholder the right to include the
shares of Common Stock acquirable upon exercise of the warrant in certain
other registration statements of Canmax.
(3) On April 29, 1997, the Selling Stockholder entered into a Purchase Agreement
with Electronic Data Systems Corporation, a Texas corporation ("EDS"),
whereby the Selling Stockholder purchased from EDS 863,364 shares of Common
Stock. In connection with such acquisition, Canmax granted certain
registration rights to the Selling Stockholder, and pursuant thereto, has
registered for sale in the offering made hereby 863,364 shares of Common
Stock. The costs of this registration (other than brokerage commissions
and other similar expenses) will be paid by Canmax.
PLAN OF DISTRIBUTION
Canmax will not receive any proceeds from the sale of the Shares by the
Selling Stockholder. The Shares may be sold from time to time to purchasers
directly by the Selling Stockholder. Alternatively, the Selling Stockholder
may from time to time offer its Shares to or through underwriters,
broker-dealers or agents who may receive compensation in the form of
commissions, underwriting discounts, concessions or other compensation from
the Selling Stockholder and/or the purchasers of such Shares for whom they
may act as agent. However, neither Canmax nor the Selling Stockholder has
entered into any arrangements or underwriting agreements with any
underwriter, broker-dealer or agent relative to the Shares to be offered
hereby. It is anticipated that the Selling Stockholder will offer all of the
Shares held by it for sale. All expenses of registration incurred in
connection with this offering are being borne by Canmax, but all brokerage
commissions and other similar expenses incurred by the Selling Stockholder
will be borne by the Selling Stockholder.
The Shares may be sold from time to time in one or more transactions at
fixed prices, at the prevailing market prices at the time of sale, at varying
prices determined at the time of sale or at negotiated prices. The sale of the
Shares may be effectuated in transactions (which may involve crosses or block
transactions) (i) on any national securities exchange or quotation service on
which the Shares may be listed or quoted at the time of sale, (ii) in the over-
the-counter market, (iii) in transactions otherwise than on such exchanges or
in the over-the-counter market, or (iv) through the writing and exercise of
options. At the time a particular offer of Shares is made, if and to the extent
required, a supplement to this Prospectus (the "Prospectus Supplement") will be
distributed that will identify and set forth the aggregate amount of Shares
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriter for
Shares purchased from the Selling Stockholder, any commissions, discounts and
other items constituting compensation from the Selling Stockholder and any
commissions, discounts or concessions allowed or reallowed or paid to dealers,
including the proposed selling price
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to the public. In order to comply with certain states' securities laws, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, the Shares may
not be sold unless the Shares have been registered and qualify for sale in
such state, or unless an exemption from registration or qualification is
available and is obtained.
The Selling Stockholder and any dealer acting in connection with the
offering of any of the Shares or any broker executing or selling orders on
behalf of the Selling Stockholder may be deemed to be an "underwriter" within
the meaning of the Securities Act, in which event any profit on the sale of
any or all of the Shares and any commissions, underwriting discounts
concessions or other compensation received by any such dealers or brokers may
be deemed to be underwriting commissions and discounts under the Securities
Act. Any dealer or broker participating in any distribution of the Shares
may be required to deliver a copy of this Prospectus, including the
Prospectus Supplement, if any, to any person who purchases any of the Shares
from or through such dealer or broker.
Under applicable rules and regulations under the Exchange Act, any
person engaged in a distribution of the Shares may not simultaneously engage
in market making activities with respect to the Shares for a period of nine
business days prior to the commencement of such distribution. The Selling
Stockholder will be subject to applicable provisions of the Exchange Act and
the rules and regulations promulgated thereunder, including, without
limitation, Regulation M, which provisions may limit the timing of purchases
and sales of the Shares by the Selling Stockholder.
On April 29, 1997, the Selling Stockholder entered into a Purchase
Agreement with EDS, whereby the Selling Stockholder purchased from EDS the
Shares. In connection with such acquisition, Canmax granted certain
registration rights to the Selling Stockholder, and pursuant thereto, has
registered for sale in the offering made hereby 863,364 shares of Common
Stock.
In May 1997, Canmax retained the Selling Stockholder to provide
investment advisory services to Canmax regarding the Merger with AGSI.
Pursuant to the terms of such agreement, Canmax has agreed to pay the Selling
Stockholder a fee of $25,000.
In connection with the registration rights agreement and the offering
made hereby, Canmax and the Selling Stockholder have agreed to certain
indemnity provisions between Canmax and the Selling Stockholder against
certain liabilities, including liabilities under the Securities Act. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling Canmax, Canmax has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
Canmax by William D. Bagley, Cheyenne, Wyoming.
EXPERTS
The consolidated financial statements of Canmax Inc. appearing in Canmax
Inc.'s Annual Report (Form 10-K) for the year ended October 31, 1996, have
been audited by Ernst & Young LLP, independent auditors, as set forth in
their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY OTHER
PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO,
OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
PAGE
----
Available Information ii
Incorporation of Certain Documents
by Reference ii
"Safe Harbor" Statement under the Private
Securities Litigation Reform Act of 1995 ii
Prospectus Summary 1
Risk Factors 2
The Company 7
Recent Events 11
Use of Proceeds 12
Selling Stockholder 13
Plan of Distribution 13
Legal Matters 14
Experts 14
863,364 SHARES
CANMAX INC.
COMMON STOCK
----------
PROSPECTUS
----------
NOVEMBER 10, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
SEC registration fee $ 630
Accounting fees and expenses 2,500*
Legal fees and expenses (not including Blue Sky) 6,000*
Printing and engraving expenses 500*
Registrar and transfer agent's fees 100*
Blue Sky fees and expenses (including counsel fees) 1,000*
Miscellaneous expenses 0*
-------
Total $10,730*
-------
-------
- ------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The by-laws of Canmax provide for the indemnification of an individual
made a party to any proceeding because he or she is a director, officer,
employee or agent of Canmax against liability incurred in the proceeding if
(i) he or she conducted himself or herself in good faith; (ii) he or she
reasonably believed that his or her conduct was in or at least not opposed to
the best interest of Canmax; and (iii) in the case of any criminal
proceeding, he or she had no reasonable cause to believe his or her conduct
was unlawful. Insofar as indemnification for liabilities arising under the
Securities Act may be committed to directors or persons controlling Canmax,
Canmax has been informed that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act
and it is therefore unenforceable.
ITEM 16. EXHIBITS.
(a) Exhibits
The exhibits listed below are filed as part of or incorporated by
reference in this Registration Statement. Where such filing is made by
incorporation by reference to a previously filed report or registration
statement, such report or registration statement is identified in
parentheses. See the Index of Exhibits included with the exhibits filed as
part of this Registration Statement.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
3.1 Articles of Incorporation (file as of Exhibit 3.01 to Canmax's
Registration Statement on Form 10, File No. 0-22636 (the "Form
10"), and incorporated herein by reference)
3.2 Bylaws (filed as Exhibit 3.02 to the Form 10 and incorporated
herein by reference)
4.1 Registration Rights Agreement between Canmax and the Dodge
Jones Foundation (filed as Exhibit 4.02 to Canmax's Quarterly
Report on Form 10-Q for the period ended April 30, 1997 and
incorporated herein by reference)
4.2 Registration Rights Agreement between Canmax and Founders
Equity Group, Inc. (filed as Exhibit 4.02 to Canmax's Quarterly
Report on Form 10-Q for the period ended April 30, 1997 and
incorporated herein by reference).
4.3 Amended Stock Option Plan (filed as Exhibit 10.08 to Canmax's
Quarterly Report on Form 10-Q for the period ended July 31,
1996 and incorporated herein by reference).
5.1* Opinion of William D. Bagley (including the consent of such
firm) regarding legality of securities being offered.
10.1 Master Agreement for Computer Software Development, License
and Maintenance between CRSI and The Southland Corporation
(filed as Exhibit 10.05 to the Form 10 and incorporated herein
by reference).
10.2*** Software Development Agreement dated July 1, 1996 between
NCR Corporation and CRSI (filed as Exhibit 10.09 to Canmax's
Annual Report on Form 10-K for the period ended October 31,
1996).
10.3* Office Building Lease between Canmax and Commercial
Properties, Inc.
10.4* Employment Agreement, dated June 30, 1997 between Canmax
Retail Systems, Inc. and Roger D. Bryant.
10.5* Employment Agreement, dated June 30, 1997 between Canmax
Retail Systems, Inc. and Philip M. Parsons.
10.6* Employment Agreement, dated June 30, 1997 between
Canmax Retail Systems, Inc. and Debra L. Burgess.
10.7* Amendment No. 3 to Master Agreement for Computer Software
Development, License and Maintenance dated October 31, 1997
between Canmax Retail Systems, Inc. and the Southland
Corporation.
23.1* Consent of William D. Bagley (included as a part of his
Opinion filed as Exhibit 5.1 hereto).
23.2* Consent of Ernst & Young LLP, independent auditors.
24.1** Power of Attorney.
* Filed herewith.
** Previously filed.
***Portions of this Exhibit were omitted and have been filed
separately with the Secretary of the Commission pursuant to
Canmax's Application requesting confidential treatment under
Rule 406 under the Securities Act of 1933, as amended.
(b) FINANCIAL STATEMENT SCHEDULES
Schedules have been omitted because they are either not applicable or
the required information has been disclosed in the financial information or
notes thereto.
ITEM 17. UNDERTAKINGS.
(a) Rule 415 Offering. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement;
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the Registration Statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated
by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(b) Filings incorporating subsequent Exchange Act documents by
reference. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(h) Request for acceleration of effective date. Insofar as
indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to Canmax's Articles of Incorporation, Bylaws, both as amended, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
(i) Rule 430A. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Irving, State of Texas, on the
5th day of November, 1997.
CANMAX INC.
By: /s/ Roger D. Bryant
--------------------------------
Roger D. Bryant,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed on the 5th day of November, 1997, by the following
persons in the capacities indicated:
SIGNATURES TITLE
- ---------- -----
/s/ Roger D. Bryant Chief Executive Officer, President and Director
- --------------------------- (Principal Executive Officer)
Roger D. Bryant
/s/ Philip M. Parsons Executive Vice President, Chief Financial
- --------------------------- Officer and Director (Principal Financial
Philip M. Parsons and Accounting Officer)
/s/ Debra L. Burgess* Executive Vice President, Chief Operating
- --------------------------- Officer and Director
Debra L. Burgess
Director
- ---------------------------
Nick DeMare
Director
- ---------------------------
Robert M. Fidler
/s/ Thomas Rinehart* Director
- ---------------------------
Thomas Rinehart
Director
- ---------------------------
C. William Robertson
*By: /s/ Philip M. Parsons
- ---------------------------
Philip M. Parsons
AGENT AND ATTORNEY-IN-FACT
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
3.1 Articles of Incorporation (file as of Exhibit 3.01 to Canmax's
Registration Statement on Form 10, File No. 0-22636 (the "Form
10"), and incorporated herein by reference)
3.2 Bylaws (filed as Exhibit 3.02 to the Form 10 and incorporated
herein by reference)
4.1 Registration Rights Agreement between Canmax and the Dodge
Jones Foundation (filed as Exhibit 4.02 to Canmax's Quarterly
Report on Form 10-Q for the period ended April 30, 1997 and
incorporated herein by reference)
4.2 Registration Rights Agreement between Canmax and Founders
Equity Group, Inc. (filed as Exhibit 4.02 to Canmax's Quarterly
Report on Form 10-Q for the period ended April 30, 1997 and
incorporated herein by reference).
4.3 Amended Stock Option Plan (filed as Exhibit 10.08 to Canmax's
Quarterly Report on Form 10-Q for the period ended July 31,
1996 and incorporated herein by reference).
5.1* Opinion of William D. Bagley (including the consent of such
firm) regarding legality of securities being offered.
10.1 Master Agreement for Computer Software Development, License
and Maintenance between CRSI and The Southland Corporation
(filed as Exhibit 10.05 to the Form 10 and incorporated herein
by reference).
10.2*** Software Development Agreement dated July 1, 1996 between
NCR Corporation and CRSI (filed as Exhibit 10.09 to Canmax's
Annual Report on Form 10-K for the period ended October 31,
1996).
10.3* Office Building Lease between Canmax and Commercial
Properties, Inc.
10.4* Employment Agreement, dated June 30, 1997 between Canmax
Retail Systems, Inc. and Roger D. Bryant.
10.5* Employment Agreement, dated June 30, 1997 between Canmax
Retail Systems, Inc. and Philip M. Parsons.
10.6* Employment Agreement, dated June 30, 1997 between
Canmax Retail Systems, Inc. and Debra L. Burgess.
10.7* Amendment No. 3 to Master Agreement for Computer Software
Development, License and Maintenance dated October 31, 1997
between Canmax Retail Systems, Inc. and the Southland
Corporation.
23.1* Consent of William D. Bagley (included as a part of his
Opinion filed as Exhibit 5.1 hereto).
23.2* Consent of Ernst & Young LLP, independent auditors.
24.1** Power of Attorney.
* Filed herewith.
** Previously filed.
***Portions of this Exhibit were omitted and have been filed separately with
the Secretary of the Commission pursuant to Canmax's Application requesting
confidential treatment under Rule 406 under the Securities Act of 1933, as
amended.